24 Apr 2024

Pension Mortgages

A Pension mortgage is an interest only mortgage with an additional investment plan in the form of a personal pension. A personal pension is a stock market based investment that benefits from tax relief and tax free growth.

A pension pays a tax free lump sum and a monthly taxed income on retirement. The lump sum is normally used to pay off the mortgage.

Pros and Cons of Pension mortgages

Advantages

• Pension contributions benefit from up to 40% tax relief for higher rate tax payers.

 

Disadvantages

• Your mortgage debt remains constant throughout the mortgage period.
• You have no guarantee that you will have sufficient funds to pay off the mortgage at the end of the repayment period, as the pension fund could perform below expectations. (By monitoring your pension fund's performance, you could make additional contributions during the repayment period if you felt it was under performing.)
• The lump sum cannot be used for other purposes. You therefore need to ensure that your level of pension contributions are sufficient enough to maintain your required standard of living during retirement.
• The mortgage period may be longer than 25 years, depending on your age. You will still need to meet interest rate payments throughout this period.

The tax situation regarding pensions is open to unforeseeable changes.

Discounted Pension Mortgage Protection Insurance

On pension mortgage protection insurance cover, critical illness insurance cover and permanent health insurance cover Go Direct rebate a minimum 50% of the initial commission that the provider would have paid to us back into your policy reducing the cost of your monthly insurance premiums. Get an instant Pension mortgage life insurance protection quote today from Go Direct.

Do you want fee free Pension mortgage advice?

For Pension mortgage or remortgage advise please feel free to contact us for independent mortgage advice from a professional pension mortgage advisor.

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We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £349

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE